Firms must be profitable to stay in UK post-Brexit, says Japanese ambassador

Japan has a “high stake” in Brexit trade negotiations and firms cannot operate in the UK if it is not profitable, Japan’s ambassador to the UK has said.

Koji Tsuruoka said Theresa May had acknowledged the importance of Japan to Britain’s post-union economy and added major Japanese firms were “determined” to continue operating in the country but wanted “clarity”.

He was speaking in Downing Street after attending a meeting at Number 10 between the Prime Minister and the heads of businesses including household names such as Mitsubishi, Honda, Nissan and Panasonic, which employ thousands of workers across the country.

The talks, arranged following Mrs May’s trip to Japan last August, came amid concerns over official estimates of the impact of Brexit on economic growth.

Mr Tsuruoka warned: “If there is no profitability of continuing operations in the UK, not Japanese only, but no private company can continue operation so it is as simple as that.

“This is all high stakes and I think all of us need to keep in mind.”

Mrs May, who was the only woman present, told the businessmen Brexit would allow the UK to forge a free trade deal with Japan.

Joined by Chancellor Phillip Hammond, Business Secretary Greg Clark and International Trade Secretary Liam Fox, Mrs May opened the meeting, saying: “As we look ahead of course I recognise that UK’s exit for the European Union is no small undertaking, but importantly it does present an opportunity to strike free trade deals around the world and build on our already strong relationship with Japan.”

Asked about Cabinet divisions over trade negotiations, Mr Tsuruoka said: “I am not under that impression coming out of today’s meeting.

“I am under the impression that the UK Government is very firmly united behind the Prime Minister’s leadership in search and in pursuit of achieving the free, frictionless trade with the EU in a most ambitious manner.”

He added that companies, in particular the major manufacturers, “expected” free access to the European market and Japan had also lobbied Brussels on the importance of “healthy, sound” trade relations.

Koji Tsuruoka speaking in Downing Street (Steve Parsons/PA)

Official estimates obtained by Sky News of the potential impact of non-tariff barriers – such as extra red tape, customs checks and rules of origin regulations – on various economic sectors, suggested the motor industry faced cost increases of between 5% and 13%.

And the economically important financial services sector stood to suffer a 5% to 10% cost increase.

After the meeting, a Downing Street spokesman said: “The Prime Minister set out her vision for an outward looking, global Britain, and the long-term opportunities presented by the modern Industrial Strategy.

“Business representatives expressed their appreciation for the opportunity for constructive dialogue with the Government, and agreed on the importance of the time-limited implementation period in providing clarity and certainty for people and businesses.

“There was also agreement on the importance of moving quickly in the negotiations to secure a trading relationship with the EU that is as tariff-free and frictionless as possible following the implementation period.”

Around 879 Japanese companies employ 142,000 staff in the UK, according to figures from the Japan External Trade Organisation (Jetro) and the Japanese Embassy.

And the Asian nation has made significant investment in The City of London, with Japanese banks treating the UK capital as a financial gateway to the rest of Europe.